AUD/CAD Under Short-Term Selling Pressure, Eyes Key Support Levels

13/02/2025

Market Overview

The Australian dollar remains under selling pressure, weighed down by concerns over declining trade volumes with China and persistent domestic economic fragility. While risk appetite has improved following positive developments regarding a potential ceasefire between Russia and Ukraine, it has not translated into sustained AUD strength. The Canadian dollar, on the other hand, has shown relative resilience, as broader risk sentiment supports commodity-backed currencies. However, investors remain cautious ahead of key Canadian retail sales data, which could influence near-term price action in AUD/CAD.

Technical Analysis

On the one-hour chart, AUD/CAD continues to trade in a bearish structure, following the break below 0.89631, a previous support level. Sellers are in control, and the pair is now testing the 0.89580 support, which is a key short-term pivot. A sustained break below this level would likely extend losses toward 0.89514, 0.89442, and 0.89325, all of which align with prior demand zones.

Momentum indicators reinforce the downside bias. RSI remains below 50, confirming that selling pressure dominates, while MACD has turned increasingly negative, reflecting a strengthening bearish trend.

If buyers attempt a rebound, 0.89703 serves as immediate resistance. A clear breakout above 0.89820 is needed to invalidate the bearish setup, shifting focus towards a potential corrective move higher.

Key Technical Levels

Resistance Levels: 0.89631, 0.89703, 0.89820
Support Levels: 0.89580, 0.89514, 0.89442, 0.89325

Fundamental Drivers

Geopolitical Developments and Risk Sentiment: Optimism over Russia-Ukraine ceasefire discussions has improved broader risk appetite, limiting safe-haven demand for USD and CAD.

Australian Dollar Weakness: Concerns over China’s slowing trade activity and Australia’s fragile economic outlook continue to weigh on the AUD.

Canadian Retail Sales in Focus: Friday’s Canadian retail sales report could provide fresh direction, especially if data surprises market expectations.

Conclusion

AUD/CAD remains under short-term selling pressure, with further downside likely if 0.89580 fails to hold. A break below this level could accelerate declines toward 0.89442, while a recovery above 0.89703 may ease selling momentum. The Canadian retail sales report remains a key event to watch for additional market direction cues.